Looks like Uncle Sam is at it once more – attempting to tax Coloradans’ TABOR refunds in a bid that would amount to double taxation. It was just last February that the IRS had backed down from its previous such attempt after bipartisan pushback from Colorado’s congressional delegation and elected leadership, including Gov. Jared Polis.

Now, it seems the IRS wants to reach deeper into Coloradans’ pockets after all.

As Polis’ office confirmed in a news release issued Wednesday denouncing the development, the IRS has issued a new “guidance” on how it intends to treat state tax refunds like those issued in Colorado. It lumps Colorado’s unique TABOR refunds in – wrongly – with routine refunds made to taxpayers who overpaid state taxes in others states.

The upshot of the new guidance is that Coloradans will have to declare TABOR refunds as part of their gross income when they pay federal taxes if they itemize their state taxes on their federal returns.

Commendably, Polis is speaking out against the IRS as he did the last time the issue came up.

“This absurd potential action from the IRS would cost Coloradans money … and I call on the Biden administration to reverse course,” Polis is quoted as saying in the release.

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“The IRS is proposing going back on 30 years of not treating TABOR refunds as taxable income,” Polis said.

“Our administration strongly disagrees with the IRS guidance as it fails to factor in that TABOR refunds are returning sales tax dollars in addition to income tax dollars and fees that our citizens have already paid and therefore are an entirely legitimate tax refund and should not be subject to further state or federal taxation.”

Indeed, TABOR refunds are not like other states’ tax refunds or, for that matter, federal tax refunds.

TABOR – the Taxpayer’s Bill of Rights, enacted into the Colorado Constitution by state voters in 1992 – limits annual growth in state and local government spending to the rates of population growth plus inflation. Revenue taken in over that amount must be refunded to the taxpayers unless they agree to do otherwise on the next ballot.

As Polis points out, the refunds represent not only income tax paid into the public till but also revenue the state collects from sales tax and an ever-growing array of fees.

That’s why the money returned to the public is divided into equal amounts for the recipients – to reflect the wide-ranging sources of the TABOR surplus rather than the payments of any individual taxpayer. After all, TABOR limits the public dollars government can collect, not the tax liability of any specific Coloradan.

Which is why the IRS is out of bounds in reaching for our refunds. They are unique; no other state has a Taxpayer’s Bill of Rights.

In the last dustup, both of Colorado’s U.S. senators and all eight of its members in the U.S. House from both parties signed a letter to IRS headquarters urging the agency “to treat Colorado Taxpayer’s Bill of Rights (TABOR) revenue payments as nontaxable income – keeping with previous … precedent for the past thirty years.” It worked.

Let’s have another such response this time, joining the governor.

Meanwhile, we’d urge the governor to rethink his support for Proposition HH on this fall’s statewide ballot. It will ask voters to give up those same TABOR refunds in exchange for half-baked “property-tax relief.”

As we fight the feds in Washington, let’s not surrender to big government on the home front.

Denver Gazette Editorial Board